Bayer, Nektar moving into Mission Bay

Biotech

By Tom Abate, Chronicle Staff Writer

Published 4:00 am, Monday, May 17, 2010

In a boost for San Francisco, Bayer HealthCare is expected to announce today that it will open a U.S. Innovation Center near the UCSF Mission Bay campus, filling the void that rival drugmaker Pfizer created last year when it canceled plans to make the city its hub for biotech discovery.

Bayer, a German pharmaceutical giant with a bio-manufacturing operation in Berkeley, will move 65 researchers into the building at 455 Mission Bay Blvd. S. that Pfizer left vacant last July after a merger caused the New York pharmaceutical company to rejigger its facilities.

City and UCSF officials say they're thrilled to land another major drug company and Bayer officials say they're eager to relocate their research team, now based in Richmond, to work amidst the academic and startup energy around UCSF.

Anchor tenant

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"This is a real milestone for Mission Bay and for all our efforts to attract and grow biotech and life sciences companies to the city and region," Mayor Gavin Newsom said in a statement. "We see Bayer as more than just another company. It's an anchor and a catalyst for future activity and innovation."

Regis Kelly, director of QB3, the UC-sponsored research and commercialization magnet at Mission Bay, said that while Bayer will take only half the space Pfizer would have used, the other half of the same building will soon be occupied by Nektar Therapeutics, a biotech firm that will be moving to San Francisco from San Carlos.

"Within about eight months of them (Pfizer) backing out, we filled out the space with two other companies," Kelly said. He thinks the momentum is starting to favor Mission Bay as the economy improves and drug companies look for places to invest.

Bayer vice president of biologics research Terry Hermiston, who heads the company's discovery center in Richmond and will run the newly christened U.S. Innovation Center when it opens later this year, said Mission Bay offered a perfect opportunity.

Potential collaborators

"We wanted to be where the cutting-edge research was being done and there was space available," said Hermiston, adding that the decision followed some corporate soul-searching about where Bayer could find the richest pool of potential collaborators in fields like hematology, oncology, cardiology, women's health and diagnostic imaging.

This is Bayer's second big investment in the Bay Area in recent months. In September it decided to spend more than $100 million over the next four years to modernize a plant in Berkeley that employs 1,400 people making a blood coagulant for hemophiliacs.

In both instances, Bayer's decision hinged in part on inducements from state and local officials, including Gov. Arnold Schwarzenegger, eager to disprove the notion that California won't roll out the red carpet for industry.

In Mission Bay, Bayer will benefit from an enterprise zone designation that could result in five years' worth of tax credits for some employees, as well as an exemption from San Francisco's 1.5 percent payroll tax for 7 1/2 years.

Newsom spokesman Tony Winnicker said the city's willingness to use all the means at its disposal to lure biotech firms to San Francisco are bearing fruit, with 56 companies now employing 2,750 people within the city's borders - whereas in 2004 only one biotech firm had a San Francisco address.

Town and gown

Meanwhile, with 3,300 students and staff members circulating around the Mission Bay campus, UCSF Chancellor Susan Desmond-Hellmann recently asked some academic and industrial leaders to brainstorm about how to bring town and gown together to create the biotech community of which San Francisco has dreamed.

"Physical proximity is not enough," said UCSF's Kelly, adding that the hope is to create opportunities for the face-to-face interactions from which new collaborations can arise.

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